Loans that relate to larger, multi-tenanted, commercial-use properties usually cannot be repaid prior to maturity of the mortgage. However, loans that relate to smaller, owner-occupied commercial-use properties usually have prepayment privileges that are similar to conditions of mortgages for residential properties. In other words, the loans may be repaid before maturity, provided that the mortgagee owns an incentive or “bonus” for permitting the early repayment of the loan.
There are different types of mortgage loans that are available to commercial-use property owners such as:
Closed mortgages – Mortgages that cannot be terminated and the loan repaid before maturity of the contract.
Open mortgages – Mortgages that may be terminated without payment of a bonus to the mortgagee.
Fixed-rate mortgages – Mortgages for which the interest rate remains the same throughout the term of the contract.
Amortized mortgages – Mortgages for which the instalment payments remain the same during the term and for which principal is repaid to the mortgagee on a sinking-fund plan.
Interest-only mortgages – Mortgages for which the instalment payments are only interest, and the mortgagor owes the same money at maturity of the mortgage that was initially borrowed.
Adjustable-rate mortgages – Mortgages that are amortized and for which the interest rate may fluctuate during the term because it has been pegged to rise or fall with the commercial banks’ prime lending rate, which is referred to as “Prime”. The instalment payment for adjustable-rate mortgages changes whenever the interest rate changes.
All of these types of mortgage loans are available from Domus Financial Corporation. Domus’ management team consults with you regarding which type of mortgage loan best suits you and your unique circumstances.